The Manx
Nationalist Party - Advocating Republican Independence since 1963

The following submission was
made to
the Isle of Man Treasury in
response to consultation on the concept of tax-capping wealthy
individuals. May 2005

"Taxation:
Mec Vannin is not committed to a single taxation rate, but believes
that there should be a sliding scale and a tax on speculative gains."

The above is current Mec Vannin Policy and in response to the notion
that high earning individuals should be attracted to our Island with
yet another tier of tax avoidance, Mec Vannin has studied its policies,
statements and submissions that are relevant to this and, consistent
with all such, utterly reject the proposal. The very depressing part of
this is that, from reading the consultation document, it is not the
viability of this scheme that is being consulted upon, but merely the
level at which capping occurs: Mr Bell has clearly already decided upon
this course of action.

As such, it would be possible to leave the submission at that point but
there are obviously those in Treasury, most particularly the Minister,
who have not learned the lessons of their own lifetime.

This is nothing more than the utterly unsuccessful, discredited and
anti-social New Residents Policy revisited. The only result of that
policy was that our infrastructure was burdened by tax dodgers, the
Manx people were minoritised and our quality of life was, and continues
to be, thrown away to accommodate the whims of those who the
governments of the day decided were worth so much more than the people
they were meant to represent. The only benefactors of that policy were
the tax-dodgers themselves, property developers / speculators, estate
agents and accountants.

The Treasury has, as predicted by Mec Vannin five years ago, painted
itself into a corner with the suicidal zero tax rate proposal and must
now increasingly rely upon individuals' taxes to fund government. It
should be patently obvious from recent history that, if simple taxation
was the over-riding attraction to the extremely wealthy, we would be
sinking even further under the burden of high-demand, low contributing
tax-dodgers than we already are.

In actual fact, most "high worth" individuals keep, for tax-avoidance
purposes, their wealth at "arms length" and, as such, their taxable
income is much lower than their supposed worth. It is surely not our
place to tell Treasury the many and varied means by which this occurs.

Furthermore, these people use their wealth to create a lifestyle for
themselves which, all to often, is at odds with our own.

The nature of earnings is such that much will have been taxed at source
and not elligible for taxation by ourselves.

As the world and the EU in particular move towards clamping down on
tax-havens such as the Isle of Man, the liklihood is that personal
income will become increasingly difficult to shuffle around.

Referring to the document itself:

"Treasury considers that high net worth individuals make significant
contributions to the Island’s economy. At the basic level, these
contributions are made via the purchase of local goods and services,
but wealthy people relocating to the Isle of Man may also set up
businesses that then provide employment opportunities for others."

Successive governments of the Isle of Man have, over the past twenty
years at least, actively encouraged non-Manx firms into the Island to
the detriment of established Manx, tax-paying businesses. The
shareholdings of these imported companies and
consequently most of the profits, leave the Island and will continue to
do so. The lack of encouragement for home produced goods in all sectors
means that most saleable goods are imported. The notion that the
presence of these individuals will benefit our country through personal
spending is tenuous in the extreme.

"Dividends paid by trading or investment companies will continue to be
taxable in the hands of Manx resident shareholders; subject to the cap
should it be implemented."

This, perhaps, reveals that Treasury has at long last realised the
insanity of the policy mentioned above but the proposals will not be
effective: During the 1970s when the disparity between Isle of Man and
UK personal tax rates was at its greatest, the "high worth individuals"
did not, for the greater part, immigrate to our country. Nothing has
changed.

"It could also be argued that there is a limit to the amount of
government-provided services and infrastructure that any person can
draw on and this point should be borne in mind when considering whether
capping personal income tax is fair or not."

This opens the door to the claim that those who pay for everything out
of their own pockets should pay no tax. That is the ultimate in
uncaring societies but recent history shows that there are those with
sway in the government who would have just such a situation. The whole
ethos of this proposal is to halt an equitable redistribution of
wealth. That is wholly unacceptable.

"Our tax coding system currently requires the deduction of ITIP from
every pound of taxable income above the ‘free pay’ amount. ITIP
regulations do not provide for a maximum deduction from remuneration.
It is proposed that the ITIP system is not modified. If an individual
pays more ITIP in the year than the tax cap amount, they would be able
to request a NT (no tax) code or, on assessment, would be entitled to
arefund of excess ITIP."

If a person is coded "NT", then they will not pay ANY tax. Now that the
ordinary Manx people are effectively to be taxed in advance on the
strength of estimated earnings, to exempt the most wealthy from any tax
payment is simply obscene.